Is Indian Government going to hike salary of Central Government employees this April?

News of increasing salaries of central government is storming digital media now a days in India. If news are believed central government will increase basic pay of central government in April 2018. Check out why there may be increase in the basic pay of e

Government thinking on increasing basic pay of central government employees

Recently 7th Pay commission recommendations were implemented for all central government employees and salary was increased as per its recommendations. However, many labour unions have demanded that minimum pay should be hiked.

Overall 14% payment was hiked by the 7th CPC which is lowest hike in last 7 decades. Majority of government servants seem to be  unhappy over this hike.

Even for the first time Indian defence forces had not accepted the recommendations and delayed the implementation of seventh pay commission. Lastly the 7th CPC recommendations were implemented after assurance by the then Defence Minister Maohar Parikkar that the matter will be taken care of. Defence forces are still waiting for the words of Manohar Parikkar to become true.

Last year the government has constituted a high level committee to look into fixation of minimum pay and other anomolies highlighted by various central government agencies. In October many media reports suggested that the high level committee has recommended to increase the minimum pay level and multiplication factor to 3 from existing 2.57. Even reports emerged as Indian Finance minister Arun Jaitley approved the recommendations. But all these reports seem to be fake as till now no official announcement has been made to increase the minimum pay hike for central government employees.

In January 2018, the news of minimum pay hike emerged once again in the digital media. Even media reported that Arun Jaitley may announce the minimum pay hike in the Annual Budget 2018. Minimum pay hike was not mentioned in the Budget session.

Now fresh reports are emerging that the government will announce the minimum pay hike for government employees who are in the level 5 and below index. There is news of increasing multiplication factor to 3 from 2.57. If reports are to be believed, the government will announce the hike in April 2018. Upcoming lok sabha elections are said to be the reason for the delaying the announcement as central government wants to woo government employees by announcing it in 2018.

As per our view, government is unlikely to hike the minimum pay of central government employees. If the government had to woo the central government employees, it would have relaxed income tax for the middle class section which did not take place. Increasing minimum pay will increase burden on the government. As the government revenues dipped following implementation of GST and demonetisation, the government is unlikely to bare more burden in the form of pay hike. Also this year the government has allocated huge amount for agriculture sector and social security schemes. Normal income tax slabs were kept unchanged and also the long term capital gain tax was introduced by the government. All these measures indicate that the government is cautious about its expenditure as it has entered into the final year of ruling.

The government has more funds to complete the various projects through which it can prove that their work is praiseworthy and it will pitch for next term.

So keeping in view of the above facts, the government is unlikely to announce pay hike for central government employees.